When should you customize your ERP and why?

While some argue that ERP customization is still a critical operational element, modern systems have become so internally adept that their advanced processing and reporting capabilities largely render the concept moot.

On top of this, progressions in complexity and stability have also come to the fore; the more an ERP is customized, the higher the risk of unexpected behavior that requires remedial action. This support, whether internal or external, costs time and money. For any enterprise, these unplanned expenses are better allocated to more progressive operational needs.

So after all is said and done, when does an ERP system require customization, and why? Well, as a former CIO, here are my takes on the matter.

If you must customize your ERP, do it later

Systemically, commercial ERP platforms are created based on matrices of fixed code instructions, guided by various subjective operational requirements, and limited by the sophistication of a company’s development capabilities.

This means that, other than the scale of use, differences between ERP functionality, its UI, and other relevant operational bits are primarily defined by what brand managers and developers define as one or more commercial advantages.

Recommended reading: figure out which functionalities you need with our list of 70 ERP features to consider for your next system.

Whether a particular system is driven to showcase the simplicity of its UI, its depth of reporting, speed of processing, or easy integration with third-party apps, ERPs live and die on the basis of quality assurance tests, and are measured on the basis of entirely subjective levels of judgment.

As a practical matter, this recognition means that while a system may work just fine as long as its technical ‘envelope’ isn’t exposed to anything but itself, as soon as you open a port, or create an unknown customization, all bets are immediately off.

As Rebecca Wettemann (at the time, VP at Nucleus Research Inc.) said in a 2011 article in CIO Magazine,

“We…see more and more CIOs going the 'less customization' route…10 years ago, they did a lot of customizations. But I would say that the majority today are going 90 percent out of the box — with very vanilla installations. It gives you a more predictable and cheaper deployment and then obviously, it makes upgrades less disruptive and less costly."

Over a decade later, Wettemann’s analysis has proved prophetic, though the margin for deviation has narrowed even further.

The rise of industry-specific solutions

Today, the "90 percent out-of-the-box" goal has shifted toward a "clean core" mandate, where any modification to the source code is viewed as high-risk technical debt.

In her more recent research at Valoir, Wettemann highlights that the value of modern ERP lies in its ability to support AI-enabled workforces and rapid innovation, capabilities that are often hindered by the "spaghetti code" of the past.

She notes that leading vendors now strongly discourage custom code, urging CIOs to use "verticalized" applications pre-configured for specific industries instead.

Final thoughts

Since today's cloud platforms deliver continuous, automated updates, even minor customisations can "break" the system, locking a company out of the latest AI and analytics capabilities. Consequently, CIOs aren't just choosing the vanilla route for predictability, but to ensure their systems remain agile enough to survive an era of rapid digital transformation.

That said, there will be times when you are going to want to alter one or more central elements by customizing a process, report, or other kind of script; and that's fine. However, if you do, be sure that you know what's going on under the hood before you turn the ignition.